News keeps getting worse for Target Co. after last year’s data breach. This past week, the retail giant announced that its prediction of 70 million people potentially being victims to stolen personal information might be an underestimation of the attack. As a result, customers may be forming a backlash as Target suffers thanks to the data breach enacted during the holiday season.
The data breach took place during the last quarter of 2013 between Nov. 27 and Dec. 15. During the initial announcement of the breach, it was reported that up to 40 million accounts had been hacked into due to a data encryption attack.
Later on in the investigation, it was also noted that an additional 70 million data files of customer accounts had been seized as well. Now, Target investigators have announced that this number could rise to an even greater amount once research of the case has been completed. To make matters worse, the numbers could surpass that of the data breach from 2007 when T.J. Maxx, Marshalls and Homegoods stores lost 90 million or more records.
Target has done itself no favors in the media over the last few months either. While it was expected for consumers to be upset over their information being stolen, Bloomberg’s report of Target ignoring early signs of the Nov. 30 attack hasn’t helped the state of mind of the average customer.
Exactly how much has this attack hurt Target? In January, only 33 percent of customers shopped at Target. By comparison, there were 43 percent customers through online and in store traffic at the same time a year ago.
Additionally, Target’s net income has dropped to a new low. In 2012, the company’s income was $961 million; however, 2013’s total dropped a steep 46 percent to $520 million. There are a number of extraneous reasons for this drop. It’s no coincidence Target suffers from backlash of profits immediately after the data breach. Most unfortunate for them is that this was the period of the year that is most profitable as it was during the Christmas holiday rush.
One of the largest declines for Target is that of the visitors in the 32-49 demographic, who have dipped down to 53 percent compared to the previous year. This group is usually among the more principle shoppers and if they have been scared off due to the breach, the company is going to have problems.
Another problem for the future of Target Co. is the 80 or more class action lawsuits Target faces in the coming year. Furthermore, there is many millions of losses and replacement cards to be reimbursed to banks after the attacks as well.
Target stock also is being hurt as a result of the breach with shares being down six percent since the breach.
When you add all these things together, it’s problematic for Target. While the breach wasn’t intentional or an inside job, it is evident customers have a lack of trust in the company currently.
Once a customer base has lost its trust in a company, it’s hard for it to rebound. While Target may be one of the most successful big box retailers, only time will tell as far as how much the company suffers in backlash after this data breach.
By Simon Mounsey